Will HELOCs cause another crash?

Back in June, the Wall Street Journal published a chart very similar to the mortgage payment shock chart that alerted me to the original subprime crisis back in '05.  This time the payment shock is on tens of billions in home equity lines of credit.

The magnitude is roughly the same as the subprime crisis, except since these are second mortgages and the housing market has barely recovered, there is almost no collateral behind them.   Wells Fargo is most at risk.

I continue to be invested in gold because of two things I learned from the last crash.  I found out that the system was even closer to total collapse than I thought and I was lucky that I didn't get wiped out be being "too" right.  I also learned that if I had simply invested in gold, I would have made just as much profit as all of my risky perfectly timed derivative trades and short sales, but with no risk of a systemic collapse wiping me out.

long gold.

good luck!

Bull Markets 1871 to July 2014

Source: http://greenbackd.com/2014/08/04/bull-markets-1871-to-july-2014-duration-and-magnitude-update/

Rent vs Buy calculator

The New York Times updated their rent vs buy calculator.   They were the first ones to allow a house price fall in their model, back in 2007.

Check it out:

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

I'll have a permalink on the right side of the blog.

Where is the gold?

In Jan 2012, Germany announced it planned to repatriate 700 tons of gold held on their behalf (for free . . . how nice of them) from the US Federal Reserve and the Central Bank of France.  They were shockingly told it would take 8 years.  So far, they have received only 37 tons.  In the mean time, China has imported 2,000 tons of gold.

http://www.zerohedge.com/news/2013-12-24/year-later-bundesbank-has-repatriated-only-37-tons-gold-700-total

Four Horsemen documentary

This documentary starts out explaining that all empires go through 6 phases (typically spanning 250 years)

1. Pioneer
2. Conquest
3. Commerce
4. Affluence
5. Intellect
6. Decadence

It would seem that we have been in the decadence stage since the '70s.

I think we are also concurrently in the pioneer phase of the internet replacing traditional roles of government (e.g. bitcoin, on-line education, bike sharing and ride sharing for public transportation).
Hopefully we will smoothly transition to a new more robust and democratic world based on that otherwise we face a totalitarian world government and global currency rising from the ashes of the current system and starting the cycle again leading to another round of debt slavery.

-Voltron

Spy Magazine on Short Selling

Here is the article from 90's humor magazine "Spy" that introduced me to short selling as an undergrad (and also warned me about the dangers of Scientology)

Fiat Money

Why house prices are up (for now)

Mortgage rates have just started going up, and everyone knows when mortgage rates go up, house prices go down because people can't afford to buy as much house; however, when mortgage rates start to go up, house prices "head fake" up as people rush to buy a house to "lock-in" their mortgage interest rate before it goes even higher.

Sell Facebook

If I owned facebook, I'd sell it now because the insiders are allowed to sell their shares starting in September.

http://www.nypost.com/p/news/business/facebook_vaults_past_U8XGueu870ddMtiTUIpg4L

Fed GDP predictions are a joke

Don't trust the Fed with gold

I knew that the Fed had Germany's gold and was refusing to return it in a timely fasion, but at 2:14 in the video it is revealed that the Fed has been holding Asian countries gold since WWII and has refused to return that as well.

The Daily Show on Goldman Sachs’ Aluminum Manipulation

The Daily Show with Jon Stewart
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get rid of GLD

Quick note: large holders of GLD can request delivery of physical gold (100,000 shares minimum or almost $14 million) and there is evidence they have been doing so and almost all of the physical gold they store is gone leaving only receipts for gold they have leased out.   The short squeeze in gold is happening.  It's time to get out of GLD and into physical gold or other assets.

Also regarding the price action in gold lately, if the bull market in gold follows elliot wave pattern, I'd expect there to be another big leg down to nearly $1000 before the final bubble occurs.

On the bright side, this dip in the price of gold gives you a chance to sell your GLD and buy physical and pay less tax than if you made that exchange at a higher price.

Keen: Greenspan's bullish, time to sell

Prof. Steve Keen, author of Debunking Economics and the Minsky dynamic computer model notes that former Fed Chairman Alan Greenspan is bullish on stocks and he's been so disastrously wrong in the past that it likely marks the top of the market.

Prof Keen promotes the idea that change in demand in the economy is the change in GDP plus the change in debt.  Private debt is often ignored by conventional economists, but by looking at when private debt starts decelerating you may be able to anticipate market crashes.  Right now we are are bit below a cyclical top stock margin debt, so look out below!

http://www.businessspectator.com.au/article/2013/4/1/markets/greenspans-bullish-time-sell

The problem in cyprus

JP Morgan Chase is a criminal enterprise

There was a Senate hearing today focusing on JP Morgan's poor controls and risk management resulting in a loss of $6 Billion by the "London Whale Trader", who is also now being implicated in the failure of Lehman Brothers.  Like HSBC, JP Morgan is being accused of a mind boggling litany of repeat offences, including money laundering and dealing with terrorists and rogue nations.  You need look no further than the fact that they spent 1/3 of last year's profits on legal fees and fines.

Watch James Rickards, author of Currency Wars, school CNBC's "money honey" Maria Bartiromo on how JP Morgan Chase exploits "too big to fail"

http://video.cnbc.com/gallery/?video=3000154861&startTime=113&endTime=546

Colbert Report: Standard & Poor’s Ratings Lawsuit

Great burn on Wells Fargo at the end

The Colbert Report
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here is the article referred to in the video: http://www.theatlantic.com/magazine/archive/2013/01/whats-inside-americas-banks/309196/?single_page=true

Why Gold is down

The Fed released a statement that they might discontinue quantitative easing (i.e., money printing).  Even though nobody believes the Fed would do this, somehow this supposedly caused a panic of gold selling, which was not at all market manipulation.   Not at all.  ;-)

Take a look at that 16 trillion dollar national debt number ticking to the right . . . there is NO WAY the Fed can let interest rates rise, because then the government would have to actually pay interest on that debt.

Gold pushed through a technical level called the "death cross" when the 50 day moving average went below the 200 day moving average at about 1,660.  That is about as reliable as Tarot Cards, but weak hands that bought gold recently would have set stop-loss orders there at and also at 1,600.

If you look at a ten year chart, gold has been going sideways for about a year.  look what happened last time it went sideways for a year (2008)  it then went from 800 to over 1900 in three years.  I think the third big wave is coming.

Macro Economics

GDP forcasts

Every year, the Congressional Budget Office predicts the economy to recover "next year".  Reminds me of how the Soviets always blamed the bad crops on the weather.  It's comical.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/19/forecasters-keep-thinking-theres-a-recovery-just-around-the-corner-theyre-always-wrong/